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Welfare data must not be used to dump the vulnerable off payments

News that the federal government is forging ahead with new ways for managing people's interactions with Australia's social security systems sounds great at first blush, but targeted investment cannot be used to simply cut people out of the welfare system at any cost.

In 2013 the government commissioned the McClure review of our social security system. The review's key recommendations include simplifying the number and types of social security payments, putting a focus on getting people back into paid work and better targeting of our welfare system.

It is this "better targeting" of our welfare system that the so called "big data" approach comes into focus. "Big data" is using detailed information about people accessing welfare systems to understand those at risk of not transitioning quickly into paid work. It has been used in New Zealand for the last four years.

Homelessness: Targeted welfare can also hit the weakest. Arsineh Houspian

Before we examine the New Zealand approach, let's get some facts on the table.

The first point is the percentage of people relying on welfare payments has dropped substantially since 2001. The latest Household, Income and Labour Dynamics in Australia (HILDA) survey shows the proportion of people aged 18-64 living in a household that received income support during the year has fallen from 37.8 per cent in 2001 to 31.6 per cent in 2014. This directly contradicts the myth that welfare dependency is on the rise in Australia. It simply isn't.

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Secondly, Australia's social security system is very lean by international standards. Growth in the cost of working-age payments is not "out of control". Spending on cash benefits is the sixth lowest among the 34 OECD countries, and typical payment rates for unemployment benefits are the second lowest compared with average incomes. Our welfare system is already the most tightly targeted in the OECD.

Of course we can improve. People looking for paid work must attempt to live off $38 per day – to pay bills, feed and clothe themselves – and look for work. It is really tough being unemployed. You face one of the great life challenges to get back on your feet and into paid work. There is almost universal agreement (including at the National Reform Summit, co-organised by The Australian Financial Review and The Australian) that the most important first investment is to lift the level of the unemployment payment.

Impact unknown

Since 2012 the New Zealand government introduced many of the changes the Turnbull government is actively considering. The results to date has seen a reduction in the number of welfare recipients and reduced expenditure on benefits. But the impact on those whose payments have been cancelled is unknown. The NZ government has not actively tracked the individuals who leave the welfare system and whether their lives have improved or deteriorated, however, we know there has been no significant improvement in employment outcomes for those leaving the welfare system. Child poverty rates remain steady and the community sector is concerned about the effect of sanctions and stricter conditions on benefit payments for families.

The Turnbull government should then ensure any changes are supported by evidence. The evidence from NZ is that 40 per cent of "job ready" people who had income support payment cancelled were receiving income support again within 12 months. If someone leaves income support their life may not have improved.

ACOSS supports targeted investment in people facing barriers to work, helping them to realise their potential. Solutions like "big data" cannot be used as a cover to simply remove people from the safety net.

Effective interventions require considerable investment to deliver results over time. For example, intensive case management is effective supporting people with complex challenges finding paid work and is part of the NZ approach to single parents. The Australian budget allocation for the investment model is modest and does not support intensive interventions beyond small target groups.

As we embark on a major debate on welfare reform we should acknowledge the great hardships born by people living on social security payments and the impact it has on their readiness for work. Then let's talk about how we might better use government funding to improve people's lives.

This isn't just a debate about budget deficits and government spending; our choices have a big impact on the lives of people who really are being left behind.

Cassandra Goldie is CEO of the Australian Council of Social Service (ACOSS), the peak body of the community services sector.

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